The theory discusses the relationship between different securities and then traces the risk interrelationships between them. Investors are assumed to be “risk averse” and therefore investment decisions should be based on an efficient portfolio concept that describes the investor's preference for maximum return for a given level of risk or minimum risk for a given expected return level. Additionally, stocks with low or negative covariance between each other can help reduce risk. Roy (1952) independently developed the “safety first” model with similar characteristics to Markowitz's model but, due to Markowitz's earlier publication, is considered the “godfather” of portfolio theory. Tobin (1958) extended Markowitz's analysis by proposing the separation theorem which suggested the way funds should be allocated between risky and risk-free